Alaska’s political landscape is currently marked by mixed signals regarding a significant budget reconciliation bill that is approaching a possible weekend vote in the U.S. Senate.
Bipartisan leaders in the state House and Senate are urging the congressional delegation to oppose the bill, which they argue could lead to the elimination of critical health care coverage and food assistance for thousands of needy Alaskans.
In stark contrast, Governor Mike Dunleavy is advocating for support of the bill, indicating that it would channel more oil and gas royalties from the federal treasury to the state in the future.
Alaska’s U.S. Senators, Lisa Murkowski and Dan Sullivan, have been relatively silent about their specific negotiations regarding the bill, which is perceived to disproportionately affect the state.
The latest version of the reconciliation bill released overnight Friday does include specific changes that pertain to Alaska, some of which concern food assistance programs.
Despite the bill featuring provisions aimed at enhancing resource development in Alaska, it has sparked concerns among local leaders, legislative bodies, and health advocacy groups.
These groups argue that cuts to Medicaid spending could result in thousands of Alaskans losing health insurance and negatively influencing the state’s economy.
The crux of the budget reconciliation bill, dubbed the “One Big Beautiful Bill,” revolves around extending tax cuts initially established by President Donald Trump during his first term.
Given the substantial costs associated with these tax reductions, the bill is projected to slash hundreds of billions of dollars from Medicaid and food assistance spending while still increasing the national deficit by trillions of dollars over the next decade, according to analyses from nonpartisan organizations.
Alaskan lawmakers have expressed escalating concern over potential Medicaid and food assistance cuts suggested by Republican legislators. In fact, the Legislature passed a resolution in May opposing the proposed cuts to Medicaid. A recent opinion piece authored by House Speaker Bryce Edgmon and Senate Majority Leader Cathy Giessel in The New York Times emphasized their viewpoint, proclaiming, “Our State Cannot Survive This Bill.”
Edgmon and Giessel noted they have “never seen federal policy whose impacts are so far-reaching and damaging” to Alaska, pointing specifically to proposed cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
They also highlighted the phase-out of renewable energy tax credits that were intended to encourage new projects throughout the state.
Although both of Alaska’s Republican Senators have expressed some backing for provisions in the bill, including the extension of the Trump-era tax cuts, they also voiced concerns regarding the projected cuts to Medicaid.
Medicaid serves approximately one out of every three Alaskans, while SNAP provides support for nearly one in ten.
Edgmon and Giessel argue that the proposed alterations would exacerbate the state’s budget balancing challenges—an exceedingly difficult task considering the ongoing decline in oil revenue and widespread resistance to new taxes.
Kevin Berry, an economics professor at the University of Alaska Anchorage, highlighted that the bill would have a disproportionate effect on Alaska due to the state’s significant reliance on federal funding. Notably, Alaska receives more federal funding per capita than any other state, leading to a net gain in federal dollars compared to what residents pay in federal taxes.
Consequently, Berry argued that any tax savings from the bill would predominantly benefit citizens in other states rather than Alaskans, saying, “Overall, Alaska is a net receiver from the federal government, so I would expect that losing spending is probably a bigger deal than reducing taxes.”
According to an analysis by the Tax Policy Center, a think tank focused on fiscal issues, the tax benefits within the bill would largely favor high-income households, with over one-third of the tax cuts directed at those earning $460,000 or more. Significantly, less than 5% of households in Alaska fall under this income bracket.
In contrast, households earning $35,000 or less—representing 16% of Alaskan families—would receive an average tax cut of under 1%, equating to about $160. Edgmon and Giessel commented, “Congress is risking our way of life to give money to the rich.”
Nonetheless, Governor Dunleavy has shown support for portions of the bill, utilizing social media to commend its elements that promise to enhance state revenue from federal oil and gas leases within the next decade.
He also noted provisions mandating lease sales in the Arctic National Wildlife Refuge and funding for a Coast Guard icebreaker stationed in Alaska. Despite these benefits, Berry emphasized that these future royalties do little to ease Alaska’s present budget crisis, stating, “We’re still in trouble with that.”
Back in May, Dunleavy shared concerns that the state “may end up losing money” throughout the budget reconciliation process; however, he later aligned with other governors supportive of Trump, urging Congress to approve the bill.
The potential cuts to Medicaid pose severe challenges to Alaska’s economy, as they threaten the vital healthcare sector, which serves as the state’s largest private employer. A decrease in Medicaid funding could lead to significant job losses within the healthcare arena, further harming the broader state economy, Berry warned.
He detailed that a significant number of healthcare providers in Alaska serve Medicaid patients, meaning cutbacks would not only impact those receiving benefits but also the entire healthcare industry.
“The healthcare sector has been one of the stronger sectors in the Alaska economy over the last few years,” Berry noted. “If we lose Medicaid and we lose those doctor jobs, we also lose that spending in the economy.”
Alaska’s healthcare advocacy organizations have continuously alerted that the versions of the budget reconciliation bill approved by the U.S. House in May—and even more so in the Senate—would jeopardize thousands of Medicaid recipients primarily due to heightened eligibility requirements.
Alaska’s Division of Public Assistance, responsible for managing both Medicaid and SNAP applications, has been grappling with persistent backlogs since Dunleavy’s administration cut over 25% of the eligibility specialists working on these cases in 2021.
Despite the state’s issues leading to food insecurity for many Alaskans, there has been little to no increase in the number of specialists appointed to tackle the backlog, which currently extends for months.
Attorneys representing benefit applicants have noted that until the staffing challenge is resolved, the Division of Public Assistance is unlikely to rectify the backlog or manage the application of new, stricter eligibility requirements promoted by congressional Republican leaders.
While Senators Murkowski and Sullivan have been reticent about the specific provisions they aim to modify in the extensive legislation, they have expressed awareness of the unique difficulties faced by Alaska’s social safety net and are actively seeking to address these in the forthcoming bill.
Some adjustments made in the newly revised version of the bill include an exemption for Alaska from SNAP work requirements. However, not all congressional Republicans agree with making special accommodations for Alaska.
Republican U.S. Representative Chip Roy of Texas criticized the demands of Alaska’s Senators, contending that “60% of Food Stamp payments in Alaska are overpayments” and argued that instead of rectifying the issue, Alaskan leaders seek a bailout from taxpayers in other regions.
Murkowski, Sullivan, and Alaska’s U.S. Representative Nick Begich did not respond to Roy’s comments immediately.
The ongoing negotiations related to Alaska’s SNAP adjustments without alienating too many of their fellow Republican lawmakers is indicative of the internal dynamics within the party, as it strives to secure enough support for the bill to progress.
With an aim to pass the budget reconciliation bill before their self-imposed July 4 deadline, congressional Republicans are working diligently to navigate these complicated challenges.
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